Hedge Fund Startup & Ongoing Costs

Discussion in 'Professional Trading' started by JTrader7, Dec 14, 2005.

  1. JTrader7


    Hi fellow Elite Traders,

    Can anyone please let me know what sort of costs I'm likely to incur in setting up and operating a small offshore commodity fund in Cayman Islands. (£1million starting capital)?

    I've been quoted $8000 for creating the fund (including the offering memorandum) + $7000 for Cayman Islands Registration fees.

    Are any there other costs to consider? Legal and accounting seem like the big ones - I can keep office space etc to a low budget.

    Many thanks for any thoughts.

  2. Could you explain why want off shore instead of a desk in a share office/PO box in your back yard?
    I assume your criteria is- "Zero Profit Tax"
    Legal entity based in one location but makes money trading Global Commodity markets& no physical business/asset at the place registered right?

    Assuming you make minimum 10-20% on 1mm,Costs at Cayman may be expensive.
  3. JTrader7


    Hi Sammy,

    Yes - Cayman is the most favourable legal / tax jurisdiction for my investors (they are not based in the US).

    Could you elaborate a little further on the additional costs I would incur in having the fund in Cayman? The set up costs I’ve been quoted don't seem too steep - Are there other significant costs that I have overlooked? Accounting I assume will be the biggest cost once up and running - are there others?

  4. duan


    Foreign investors don't need to pay capital gain tax to IRS
  5. Hire a lawyer! You never know what you've missed until it's too late!
  6. where will be the management company located?
  7. another question would be if you need independent administrator. many offshore fund require to run their books by offshore administrators. I guess it depends on your investors and if they trust you enough.
  8. If all your clients are NON US residents/citizens- ,any way they dont pay any capital gain tax on the profits of Capital market trading in USA.(Dividends & Real trust incomes are taxed!)

    I assume you are going to operate the a/c's (buying /selling) of indivual clients ,each with a seperate shelf company.
    I think Hong kong /Mauritius also offer some tax free packages.
    check with OFF shore company formation agents located in all the places on all the fees involved.
    Best of luck.
  9. A company PVT /Public formed on any location has to be audited by local auditor, should have one local resident director (in some locations) to guarantee that you will pay all the annual renewal fees etc.
  10. mokwit


    One thing to bear in mind is whether the Cayman Islands are regarded as clean for onward fund transfer purposes. I have a vague memory that we would not accept funds from the Caymans and that major banks won't. If not Cayman then certainly some offshore locations. Cayman Island bankers that I have spoken to did not come across as people on a spiritual pathwway. I suspect that many of their clients deal in cash.

    A Cayman Island link is regarded as negative by many and could be a hindrance to fund raising (or not........). When I see Cayman Island registered companies I draw conclusions as to what kind of people I am dealing with as there are other havens that offer similar benefits but not ALL benefits so if someone uses Cayman then I view that negatively.
    #10     Dec 14, 2005